Learn Strategic Brand Management
Brand Equity In Question
Strategic Implications Of Branding
Brand And Business Building
From Private Labels To Store Brands
Brand Diversity: The Types Of Brands
The New Rules Of Brand Management
Brand Identity And Positioning
Launching The Brand
The Challenge Of Growth In Mature Markets
Sustaining A Brand Long Term
Adapting To The Market: Identity And Change
Growth Through Brand Extensions
Handling Name Changes And Brand Transfers
Brand Turnaround And Rejuvenation
Managing Global Brands
Financial Valuation And Accounting For Brands
Since the early theorisation on the brand, there has been much discussion on the relationship of brands to products. How do the concepts differ? How are they mutually interrelated? On the one hand, many a CEO repeats to his or her staff that there is no brand without a great product (or service), in order to stimulate their innovativeness and make them think of the product as a prime lever of brand competitiveness.
On the other hand, there is ample evidence that market leaders are not the best product in their market. To be the ‘best product’in a category means to compete in the premium tier, which is rarely a large segment. Certainly within the laundry detergent category, market leaders such as Tide, Ariel and Skip are those delivering the best performance for heavy-duty laundry, but in other cases it is the brand with the best quality/price ratio that is market leader.
Dell is a case in point. Are Dell’s computers the best? Surely not. But who really needs a ‘best computer’? What would be the criterion for evaluation? ‘Best’ is a relative concept, depending on the value criteria used to establish comparisons and identify the ‘best’. Infarct the market is segmented: the largest proportion of the public, and even most of theB2B segment, wants a modern, reliable, cheap computer.
Thanks to its build-to-order business model, Dell was able to innovate and become the leader of that segment. Co-branded ‘Intel inside’, it reassures buyers and surprises them by its astonishing price and one-to-one customization:each person makes his or her own computer. Is Swatch the best watch? Surely not either. But in any case this is not what is asked by Swatch buyers: they buy convenience and style, not long-lasting superior ‘performance’, whatever this may mean.
It is time to look deeper into the brand–product relationship. Looking at history, most brands are born out of a product or service innovation which outperformed its competitors. A superior product/service was the determining factor of the launch campaign. Later, as the product name evolves into a brand, customers’ reasons for purchase may still be the brand’s ‘superior performance image’, although in reality that performance has been matched by new competitors. This has been the basis of Volkswagen’s leadership and price premium: a majority of consumers keeps on believing that Volkswagen cars are the most reliable ones.
The new Golf Five, launched in September 2003, 30 years after the first Golf, is 10 per cent more expensive than its two European rivals, the Peugeot 307 and the Renault Megane. This quality reputation is crucial for Golf and for Volkswagen itself: this model used to represent 28 per cent of its sale sand almost half its operating profit. When Golf 4 sales fell by 17. 9 per cent over 12months, Volkswagen’s operating profit fell too, by 56 per cent.
As all tests and garage repair records demonstrate, Volkswagen quality has now been matched and even bypassed by Toyota, but for buyers, perception is reality. Brand assets are made of what people believe. As for rumours(Kapferer, 2004), the more people believe arumour, the more strongly their belief is held. Why would so many people be completely wrong? It took 20 years for Toyota to shake the belief among US consumers that Volkswagen cars are the most reliable: it takes time to prove one’s reliability. Often, to go faster it is best to target a new generation of drivers with an open mind.
Looking at competitive behavior, it seems that brands alternate in their focus. They capitalize on their image, then innovate to recreate or nurture the belief of product superiority(on some consumer benefit), then recapitalise on their image, and so on (Figure below). Sony’s advertising is very typical of this pendulum behavior: it alternates ads that introduce new products and pure image ads with no specific material content or superiority content. These latter ads maintain brand saliency (Ehrenberg et al, 2002).
Suppose a consumer wants to buy a new car because of the birth of his or her fourth child. This major event creates a new set of expectations, some tangible, some intangible. The consumer wishes to buy a minivan, with two sliding doors, high flexibility within the cabin, and of course a reliable, secure brand, with credentials and some status.
By looking at Internet sites, at magazines and visiting dealers, it is possible to identify those models with the requested visible attributes (size, flexibility, sliding doors). Now what about the invisible attributes, like the experiential ones(driving pleasure) or those one has to believe on faith, such as reliability? Obviously, these attributes do or do not belong to the brand’s reputational capital. They cannot be observed. This is one of the key roles of brands: to guarantee, to reassure customers about desired benefits which constitute the exclusive strength of the brand, also called its positioning.
Psychologists have also identified the halo effect as a major source of value created by the brand: the fact that knowing the name of the brand does influence consumer’s perception of the product advantages beyond what the visible cues had themselves indicated, not to speak of the invisible advantages.
Finally, attached to the brand there are pure intangible associations, which stem from the brand’s values, vision, philosophy, its typical buyer, its brand personality and soon. These associations are the source of emotional ties, beyond product satisfaction.
In fact, in the car industry, they are the locus of consumers’ desire to possess a brand. Some brands sell very good products at fair price but lack thrill or desire: they cannot command a price premium in their segment. Their dealers will have to give more rebates(which undermine brand value and business profitability).
Figure below reminds us of the double nature of brands. People buy branded products or services, but branding is a not a substitute for marketing. Both are needed. Marketing aim sat forecasting the needs of specific consumer segments, and drives the organization to tailor products and services to these needs. This is skill: some car marques offer minivans with sliding doors, some do not. However, part of the willingness to pay is based on a personal tie with the brand. Uninvolved consumers will bargain a lot.
Brand-involved consumers will bargain less. Brand image is directly linked to profitability. In fact, in the Euromonitor car brand tracking study, measuring the image of all automobile brands operating in Europe, it has been said that apositive shift of one unit on the global opinion scale means there is 1 per cent less bargaining by customers.
The product and the brand
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